Third.

REORGANIZATION.

When I came into office,. March 31, 1876, the Commissioner and chief clerk, with a few other clerks, had their office-room in the Patent Office building. The balance of the force, under the immediate charge of a deputy commissioner, was located in the Seaton House and three adjacent buildings, several blocks from the Commissioner and chief clerk, which were wholly unfitted for the Bureau's use, being cut up into small rooms, and not fire-proof.

The office force was divided into eleven separate divisions, to wit, Invalid Division, Widows' Division, 1812 Division, Bounty-Land Divis ion, Medical Division, Finance Division, Certificate Division, Mail Division, Special-Service Division, Board of Review, and Board of Appeals.

It was very early discovered that the separation of the Commissioner and chief clerk from the main force of the office, and the organization with so great a number of divisions, operated greatly to embarrass and retard the transaction of business, and the objectionable character of the office added not a little to the other difficulties.

Steps were at once taken to improve the situation. The Commissioner and chief clerk moved to the Seaton House, and took personal charge of the Bureau. Unnecessary divisions were abolished, and the clerks assigned to the remaining divisions, and much unnecessary machinery dispensed with, while Congress was urged to, and did, provide for the leasing of a better building for an office, which was occupied by the Bureau on the 15th of September, 1876.

The reorganization of the office was effected gradually, and was not regarded as complete until the 15th of November, 1876. Little progress was made prior to the 30th of June, 1876, (the first three months,) and therefore the subject was not referred to in my last annual report, but left to be taken up when the reorganization should be completed and the new organization fairly tried.

The office is reorganized upon the basis of three adjudicating divisions, with jurisdiction as follows:

1. The Invalid Division adjudicates all invalid Army pension claims for service since the commencement of the war of the rebellion.

2. The Widows' Division adjudicates all Army claims of widows, minor children, and dependent relatives for service since the commencement of the war of the rebellion.

3. The Old War, Navy, and Bounty-Land Division adjudicates all claims for Army pension on account of service previous to the war of the rebellion, all claims for Navy pension, of whatever date the service, and all claims for bounty-land warrants.

There are three other divisions, as follows:

1. The Division of Records and Accounts has charge of the issue of pension certificates, and of all roll-books and records pertaining to admitted cases, the correspondence with the agents for the payment of pensions, and all matters relating to their accounts of which the Interior Department has jurisdiction, and the accounts of pension examining

surgeons.

2. The Mail Division, (a branch of the chief clerk's office,) has charge of the incoming and outgoing mails.

3. The Special-Service Division has charge of all investigations

of suspected frauds, and of all matters pertaining to claim-agents and pension-notaries.

The Medical Referee has general supervision of the medical questions, the rating of pensioners, and of the appointment of pension examining surgeons.

The Appeal Clerk has charge of the appeals from the Commissioner to the Secretary of the Interior and other miscellaneous matter.

No other demonstration is needed of the propriety of the reorganization than the statement that during the fiscal year ending June 30, 1877, the Bureau, with the force reduced 10 per cent., adjudicated upwards of 24 per cent. more claims than were adjudicated and settled during the previous year, notwithstanding the loss of time consumed in transferring the Bureau from its old to the new office, and the distractions incident to the presidential campaign and the subsequent count of the vote.

This excess of the number of claims settled the present year over the number settled the last year does not by any means represent the full increase of work accomplished. The work which was very much behindhand has been brought up nearly to date.

The deputy commissioner was dispensed with, in accordance with a special recommendation which I had the honor to make to your predecessor on the 3d day of January, 1877.

At the same time I recommended the repeal of the law creating that office, upon the ground that the commissioner and chief clerk having joined the main force of the office, and taken personal supervision thereof, all necessity for the office of deputy commissioner had ceased. I have the honor to renew that recommendation.

Too much credit cannot be accorded to the clerks employed in this Bureau, particularly to the chief clerk and division chiefs for the part they have taken in the reorganization. Without their intelligent advice and cheerful aid the reorganization would have been impossible.

The clerks and employés of the Bureau since my connection with it have generally been industrious-many of them working over hours— and have observed that degree of discipline necessary to be maintained among so many persons employed together.

Attention is invited to table IX, showing the operations of the office under the provisions of section 4744 R. S. Only $40,022.78 of the $50,000 appropriated was expended. The failure to expend the balance in the work, of which we have plenty, was partly attributable to the late passage of the appropriation bill, and partly to the fact that the condition of the office-work would not justify the withdrawal from the office for the special service of a greater number of clerks than were detailed. In addition to the money saved to the Government and to pensioners by these operations, many offenders against the laws have been brought to justice, and many unscrupulous claim-agents have been suspended or debarred from practice. The results altogether do great credit to that branch of the service.

Fourth.
PENSION-AGENCIES.

On the 7th of May an order was issued by the President, which was afterwards modified as to the location of two of the agencies, by which the number of the agencies for the payment of pensions was reduced from 58 to 18, by consolidating seven agencies in Maine, New Hampshire, and Vermont into one agency at Concord, N. H.; four agencies in Massachusetts, Connecticut, and Rhode Island into one agency at

Boston, Mass.; four agencies in New York into two agencies, one at the city of New York and one at Canandaigua; three agencies in Pennsylvania into two agencies, one at Philadelphia and one at Pittsburgh; four agencies in New Jersey, Delaware, Maryland, and District of Columbia into one agency at Washington; five agencies in Virginia, West Virginia, Tennessee, and North Carolina into one agency at Knoxville, Tenn.; two agencies in Kentucky into one agency at Louisville; three agencies in Arkansas, Mississippi, and Louisiana into one agency at New Orleans; three agencies in Indiana into one agency at Indianapolis; four agencies in Illinois into one agency at Chicago; four agencies in Wisconsin and Minnesota into one agency at Milwaukee; two agencies in Michigan into one at Detroit; four agencies in Iowa and Nebraska into one agency at Des Moines; four agencies in Missouri, Kansas, and New Mexico into one agency at Saint Louis; two agencies in California and Oregon into one agency at San Francisco; and three agencies in Ohio into one at Columbus, the consolidation to take effect July 1, 1877.

The importance of this measure, added to the fact that all the preliminary steps were of necessity taken prior to July 1, makes its progress and present condition proper subjects to enter into this report; and accordingly I submit the following:

On the 9th of May a letter transmitting the Executive order was ad dressed to each of the agents whose agencies were to be discontinued, containing a paragraph of instructions, as follows:

You will please so conduct the business of your agency henceforward, to and inclading June 30, that you will be able to make up final reports and statements, and trausfer to the agent at (the consolidated agency) the books, papers, rolls, records, files, and all other property and things whatsoever in your possession as pension agent at (the discontinued agency) and belonging to the Government, with as little delay as possible after that date.

On the 14th of June a letter was addressed to the agent at the seat of each of the consolidated agencies instructing them, in general, as follows:

That the transfer of the pensioners from the discontinued agencies consolidated with their own agency would be effected by the transfer of the rolls, records, &c., pertaining to the discontinued agencies. That they should visit each of the discontinued agencies of their respective districts, and receive from the agents the records, rolls, and Government property.

This letter also required the agents of the consolidated agencies to execute new bonds, the sureties justifying upon unincumbered real estate, (this is a new feature in the bonds of pension agents, their bonds be ing very large, it was in some cases a troublesome condition to comply with.)

The consolidation was effected promptly and without confusion. Taking place at the end of the pay-month, the pensioners were more than usually prompt in applying for their pensions, which were due on the 4th of June, and comparatively few payments remained to be made in July and August, and the payments at the consolidated agencies, in most cases, being taken up as early as July 20, and in all cases before the end of the month, very little inconvenience was experienced by the pensioners.

Except in a few instances, so far as I have been informed, the conduct of the gentlemen whose offices were discontinued by the Executive order was admirable. Many of them, notwithstanding they were about

to be cut off from offices at once honorable and lucrative, expressed their approval of the consolidation in hearty terms.

The quarterly payment due September 4 has been successfully accomplished by the consolidated agencies. The payments have been made as promptly as the quarterly payments were heretofore made, and when it is considered that at this payment the invalid pensioners were required to undergo their biennial examinations, which largely increased the work of the payment over that necessary at other payments, the result is peculiarly gratifying and satisfactory.

I received a daily report from each agency during the month of September, beginning with the 4th, showing the number of vouchers received by mail for payment, the number of pensioners paid by mailing their checks, and the number paid in person at the office. These reports have been tabulated and are herewith presented. (Table XII.)

The whole number of pensioners on the rolls of the several agencies on the 30th of June was 232,104; 187,403 of these were paid in September; 6,040 more applied who would have been paid in September if the surgeons' certificates of the biennial examinations had been received, the delay being no fault of the agents; 158,361 were paid by mail, and 29,042 in person at the agencies. Those paid, augmented by the 6,040 who would have been paid but for the lack of the surgeons' certificates, makes 831 per cent. of the whole number on the rolls; 41,211 applied and were paid in the first four pay-days, and of the 158,361 to whom checks were mailed, 88,207, considerably more than one-half, were paid in the first nine pay-days.

On the fifth pay-day, Boston, Canandaigua, and New York City agencies began to reduce the number of accumulated vouchers; on the sixth pay-day, Columbus, Concord, and San Francisco; on the seventh, Chicago, Detroit, Indianapolis, Milwaukee, New Orleans, Philadelphia, and Washington; on the eighth, Pittsburgh and Saint Louis; on the ninth, Des Moines and Knoxville; and on the tenth pay-day, Louisville.

The difference in time when the respective agents began to pay pensions by mail faster than the vouchers were received by the same source, and so reduce the number of unpaid vouchers awaiting payment in their offices, is not altogether due either to the relative efficiency of the agents or to the manner of conducting their offices. Much is attributable to the difference in the mail facilities, and to other causes not affecting the character of the agents.

It will be understood that the bringing together, in each of the consolidated agencies, of so many roll-books has made the rolls very unwieldy. This, added to the bad condition of many of those rolls, has made the last September payment a very difficult and expensive one to the agents.

Preliminary steps have been taken to effect a consolidation of the rolls in the several agencies upon a uniform plan; and when this shall have been done, the payments will be even more prompt than the last, and the agencies will be more economically operated.

It is too early to state the precise cost of making the payments during the fiscal year ending June 30, 1877. It will not, however, greatly differ from that of the previous year. Upon the basis of that year the consolidation saves to the Government, in salaries of the agents, one hundred and forty-two thousand dollars ($142,000) per annum.

In addition to the percentages upon payments made which represents their respective salaries, each agent receives twenty-five cents for each voucher paid by him, which, with some small allowances for postage, &c.,

is supposed to reimburse him for the expenses of his office, made up of rent, fuel, lights, clerk-hire, &c. In my judgment, this plan of reim bursement of expenses is a bad one, and, since the consolidation of the agencies, it results in paying too large a sum of money for that purpose in all cases, except at San Francisco and New Orleans. The rolls of these agencies being small, the agency expenses are greater in proportion to the number of pensions paid.

Of the eighteen agents, nine have their offices in buildings belonging to the Government, and pay nothing for rent, fuel, and lights.

In view of this, I recommend that a fixed sum be allowed for every 1,000 payments made each quarter, to cover postage, stationery, and clerk-hire, and that no other allowance be made for the agents' disburse ments except for rent, fuel, and lights, and making new rolls. All leases, as well as the bills for fuel and light, and making new rolls, to be approved by the Secretary of the Interior before payment.

If a revision of the fees and compensation of pension agents shall be made upon the above plan, it cannot fail to effect a considerable ad ditional saving to the Government.

Very respectfully,

The Honorable the Secretary of the Interior.

J. A. BENTLEY,

Commissioner.